Mwihia & 8 others v Njoroge & another [2024] KECPT 243 (KLR)

Mwihia & 8 others v Njoroge & another (Tribunal Case 837 (E890) of 2022) [2024] KECPT 243 (KLR) (7 March 2024) (Ruling)

Neutral citation: [2024] KECPT 243 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 837 (E890) of 2022

BM Kimemia, Chair, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw & PO Aol, Members

March 7, 2024

Between

Dominic Mukabi Mwihia

1st Claimant

Daniel Maina Mwangi

2nd Claimant

John Ewoi Engiron

3rd Claimant

Peter Thuo Kamau

4th Claimant

Urbanus Wambua Mutinda

5th Claimant

Teresiah Wambui Kamau

6th Claimant

Richard Kipkemoi Kiptoo

7th Claimant

Patrick Kimeu Wambua

8th Claimant

John Kungu Mwangi

9th Claimant

and

Michael Njoroge Njoroge

1st Respondent

Ncba Bank

2nd Respondent

Ruling

1. The matter coming for Ruling before us is the Notice of Motion Application filed by the Decree Holders on the 2nd day of February, 2023 and filed on the 3rd day of February, 2022. In the Application, the Claimants seek the following orders –1. Spent.2. That this Honorable Tribunal be pleased to issue an order to freeze the excess sum of Kshs. 1,660,650. 68/= with accrued interest, held or that may come to the Garnishee, NCBA Bank, in the name of Michael Njoroge Njoroge, the Respondent/ Judgement debtor herein, arising from the sale through private treaty or public auction of the mortgaged property being land Title Number Tigoni/Mabrouke Block 1/2292 Karanjee Estate – Limuru, Kiambu County, to satisfy the decree herein dated 16th January, 2023, pending the hearing and determination of the Application.3. That this Honourable Tribunal be pleased to order the Garnishee, NCBA Bank to forthwith file an upto date account statement of all accounts in the name of Michael Njoroge Njoroge, the Respondent/ Judgement debtor pending the hearing and determination of the Application.4. That the Chief Executive Officer of the Garnishee, NCBA Bank be ordered to forthwith release to Mbiriri Ngugi & Company Advocates the said excess sum of Kshs. 1,660,650. 68/= with the accrued interest to the Garnishee, NCBA Bank, in the name of Michael Njoroge Njoroge, the Respondent/ Judgement Debtor, herein. Arising from the sale through private treaty or public auction of the mortgaged property being land Title Number Tigoni/Mabrouke Block 1/2292 Karanjee Estate – Limuru, Kiambu County, to satisfy the decree herein dated 16th January, 2023. 5.That in the event that the account of Michal Njoroge Njoroge the Respondent/ Judgement Debtor in the Garnishee, NCBA Bank does not have sufficient funds to satisfy the decree herein dated 16th January, 2023, the Honorable Tribunal be pleased to issue a prohibitory order to be registered against the land Title Number Tigoni/Mabrouke Block 1/2292 Karanjee Estate – Limuru, Kiambu County prohibiting the garnishee from selling the said property without involving the Claimant’s decree herein dated 16th January,2023. 6.That the costs of the Application and of the Garnishee be paid from the said Michael Njoroge Njoroge, the Respondent/ Judgement Debtor’s Account.

3. The Application is supported by the Affidavit of the 1st Claimant, sworn on 2nd February, 2022 and filed on 3rd February, 2022 and grounds on face of the Application. The grounds of the Application set out by the Claimant are that:a.Judgment Debtor has failed to pay the decretal amount on the decree issued on 16th January, 2023, despite service and several reminders.b.The Judgment Debtor has mortgaged the property known as Title Number Tigoni/Mabrouke Block 1/2292 Karanjee Estate – Limuru, Kiambu County to NIC Bank now NCBA Bank which the secured loan of which he has defaulted to pay and the property was advertised for sale by public auction on 12th November, 2022, the sale having been scheduled to take place on 25th November, 2022. c.The value of the said property being more that the value of the charge amount owed to the bank and the Claimants are apprehensive that should the sale take place and the charge is paid off and the property discharged, the Respondent/ Judgement Debtor will receive the remaining proceeds of the sale in their bank account and as is customary for the Respondent/Judgment Debtor, he will fail, decline and/ or refuse to use the amount to pay the Claimant’s decretal sum.

4. On 3rd February, 2023, the Tribunal issued orders in terms of prayers 2 and 3 of the Application dated 2nd February 2023.

5. In response to the Applicant/ Decree holder’s Application herein, vile the Replying Affidavit sworn on 9th May, 2023, filed on 26th May, 2023; sworn by one Jackson Nyaga; the legal counsel of the Garnishee.

6. In the said Replying Affidavit, the Garnishee states: -i.That the Respondent Michael Njoroge is a holder of a current Account Number 4062870011 with the Garnishee Bank.ii.That the book balance as at 12th April, 2023 was Kshs. -161,760 being an overdrawn.iii.That as at the date of the Court’s order, the balances at the Respondent’s account was overdrawn and there were no available funds to satisfy the decree.iv.That the liability of the Garnishee on account of the Respondent’s indebtedness to the Claimant cannot be undertaken by the Garnishee as the account has been overdrawn.v.That the account holds no money to satisfy the decretal amount of Kshs 187,718/=.

7. The Garnishee prays that the consent order dated 3rd February, 2023 be valued as the same cannot be adhered to with insufficient funds in the only account held by the Bank in the name of Michael Njoroge. The Garnishee produced copies of the Bank statement.

8. In response to the Garnishee’s Replying Affidavit, the Claimants filed a Further Affidavit sworn on 22nd May, 2023 and filed on 22nd May 2023. In the Further Affidavit, the Claimant aver that the Garnishee re-advertised the sale of the Respondent/ Judgement Debtor’s charged property on 22nd March, 2023 for a public auction which was scheduled on 12th April, 2023, a fact which the Garnishee failed to disclose in the Replying Affidavit; that the Garnishee will not suffer any prejudice if the decree is settled with the excess after sale of the Respondent/ Judgement Debtor’s property.

9. Each party filed Written Submissions in support of their case.

10. The Claimant/ Decree Holder’s Submissions are dated 30th June 2023 while the Garnishee’s Submissions are dated 10th November, 2023.

Analysis And Determination. 11. We have considered all the documents filed by the Claimants/ Decree Holders and Garnishee and have the following issues for determination:1. Whether or not the Decree- Holders are entitled to the orders sought?2. Who shall bear the costs?

12. We have examined the evidence and the Submissions of parties.

13. In order for us to determine the above issues, we need to delve into the nature of Garnishee Proceedings and the prerequisites to the issuance of a Garnishee Order.

14. To understand Garnishee orders and proceedings we turn to order 23 of the Civil Procedure Rules.

15. Order 23 Rule 1 of the Civil Procedure Rules provides for the attachment of debts.Sub-rule (1) states; a court may upon the ex-parte Application of a decree holder and either before or an oral examination of the Judgement- debtor and upon Affidavit by the Decree-Holder or his advocate, stating that a decree has been issues and that it is still unsatisfied and what amount, and that another person is indebted to the Judgement-Debtor and is within the jurisdiction, order that all debts (other than the salary or allowances) coming within the provisions of Order 22 Rule 42 owing from such third person (hereinafter called the Garnishee) to the Judgement-Debtor shall be attached to answer the Decree together with the costs of the garnishee proceedings; and by the same or any subsequent order it may be ordered that the garnishee shall appear before the court to show cause why he should not pay the Decree-holder the debt due from him to the Judgement-Debtor or so much thereof as may be sufficient to satisfy the decree together with the costs aforesaid.

16. Order 23 Rule 2 provides for attachment of deposits. It states: -A credit in a deposit account with a bank or other financial institutions shall for the purposes of this order be a sum due or accruing and shall be attachable accordingly notwithstanding that any of the following requirements is applicable to the account and has not been complied with-a.That notice is required before any money is withdrawn;b.That a personal Application must be made before any money is withdrawn;c.That a deposit book must be produced before any money is withdrawn; ord.That a receipt for money deposited in the account must be produced before the money is withdrawn.

17. From the foregoing, it is clear that a Garnishee Order can only be issued against a debt owed to the Judgement-Debtor by the Garnishee or money held or kept by the Garnishee for the Judgement-Debtor, hence due and payable to the Judgement Debtor.

18. Order 23 Rule 3 of the Civil Procedure Rules provides that service of an order that debts due to a judgement-debtor liable under a decree shall be attached or notice thereof to the garnishee in such a manner as the Court may direct, shall bind such debts in his hands. This as per the Civil Procedure Rules is the effect of a garnishee order.

19. In the matter before us, we have made the following observations: - 1. For an attachment to be under order 23 Rule 1 conducted there has to be in existence a debt owing or money payable from the garnishee to the judgement debtor.

2. For an attachment to be conducted under Order 23 Rule 2, there has to be a credit in a deposit account payable to the Judgement debtor.

3. There is no evidence that the Judgement debtor’s property charged to the Garnishee was sold.

4. The Judgement-Debtor’s Account with the Garnishee is a loan account with no credit.

20. The Decree-Holders are seeking orders for attachment of proceeds of a sale of property charged to the Garnishee. The sale as it were, having been advertised is in our view a possible sale by the Garnishee to recover monies owed to it by the Judgement-Debtor. It therefore means that the Garnishee has a priority over such monies, it any.

21. It is important to state here that an attachment of money which is yet to come into the hands of the garnishee and more so for the benefit of the garnishee, does not fit within attachment as provided for under Order 23 Rules 1 and 2.

22. This is because there is no debt owed to the Judgement-Debtor by the Garnishee at this point in time and neither is there a credit deposit held for the Judgement-debtor by the Garnishee. As such, there is not debt in the hand of the Garnishee to be bound by an attachment order as expected under the provisions of the Order 23 Rule 3.

23. In the Circumstances, we hesitate to interfere with a property charged to a bank on the possibility that the same might be sold and the proceeds might exceed the debts due to the Garnishee from the Judgement-Debtor.

24. It would make a difference if the Decree-Holders waited until an attachable debt or credit is in the hands of the Garnishee, before in order to seek the necessary orders.

25. In the upshot, we find that the Claimant/ Decree Holders’ Notice of Motion dated 2nd February, 2023 lacks merit and is hereby dismissed with costs to the Garnishee.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 7TH DAY OF MARCH, 2024. HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED MARCH 7, 2024HON. BEATRICE SAWE MEMBER SIGNED MARCH 7, 2024HON. FRIDAH LOTUIYA MEMBER SIGNED MARCH 7, 2024HON. PHILIP GICHUKI MEMBER SIGNED MARCH 7, 2024HON. MICHAEL CHESIKAW MEMBER SIGNED MARCH 7, 2024HON. PAUL AOL MEMBER SIGNED MARCH 7, 2024Tribunal Clerk JemimahNo appearance by parties.Ruling delivered.HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED MARCH 7, 2024